China's coffee market taking time to brew

Increases the bookmark

A Chinese person drinks on average five cups of coffee a year. In a small town of south China's Hainan Province, this rises to 200 a year.

The figure, which is comparable to the world's average of 240 cups, has impressed international coffee dealers who are seeking to take a share of the market in China.

"I do not believe China will become the world's largest coffee consumption market in the next decade until I see it for real. But with more middle-income families, the Chinese are drinking more coffee," said David Kiwanuka, a coffee dealer with the Guangzhou office of Beijing Chenao Coffee Co., a Sino-Uganda joint venture.

Fushan Town in Chengmai County of Hainan, where local farmers started growing coffee in the early 1930s, has nurtured a strong coffee culture. Nearly 100 companies from different countries have opened outlets to promote their brands in the subtropical town.

"I was impressed at how the Chinese love drinking coffee. They have started to show great interest in coffee culture, which has made me see the huge market potential in this country," said Melaku Legesse, consul general at Consulate General of the Federal Democratic Republic of Ethiopia in Guangzhou.

Data from China Coffee Association Beijing (CCAB) showed that coffee consumption growth in the country is increasing at an annual rate of 15 percent, which is about seven times more than the average world growth rate.

According to the association, the figure may continue to expand at a pace of 15 to 20 percent annually, making China the most attractive coffee consumption market by 2020.

BEANS OR LEAVES?

Despite the fast expansion, it is unlikely that coffee will replace tea as the number one drink of choice in China, given the longstanding tea-drinking tradition in the country, CCAB Chairman Ji Ming said.

Foreign coffee brands were first introduced to China during the 1980s. Brands such as Nestle and Starbucks have played a significant role in creating a coffee culture in the country.

Ji said the culture is popular in first-tier cities like Beijing and Shanghai, as well as some southern provinces including Hainan and Fujian. But for most other regions, coffee is still an expensive "Western import".

"Even in Beijing and Shanghai, the coffee consumption level remains stubbornly lower than 30 cups per capita," Ji said, adding that the country's coffee culture is not sufficiently mature.

Annie Huang, general director with Food and Dining Culture Committee of Guangdong Food Culture Research Institute, said that China's younger generation with growing purchasing power are willing to pay more for new experiences.

"To them, Starbucks represents a luxury and fashionable experience. Many of them are attracted by this brand rather than the coffee itself. They can tell what kind of tea is good, but they can't do so with coffee," Huang said.

But Huang also admitted the huge potential for consumption and that the coffee-drinking culture has not yet reached its peak.